Americans Spent Like Crazy During the Pandemic
Does anyone know why? Anyone? Anyone?
2020 was a weird year as we all obviously know. However, some trends we’re now discovering still find ways to absolutely confound and surprise me.
The COVID-induced recession was the shortest in American history.
The Business Cycle Dating Committee of the National Bureau of Economic Research — which “maintains a chronology of the peaks and troughs of US business cycles” — defines a recession as the time period between a “peak” and “trough” in economic activity…
Previously, the shortest recession was a six-month period in early 1980.
Although the most recent recession — induced by COVID-19 and subsequent government lockdowns — was the shortest on record, federal officials responded to it with the largest omnibus stimulus packages in history.
Without a doubt, the $2.2 trillion CARES Act — passed in March 2020 and signed by President Trump — played a role in ending the recession. An analysisfrom the University of Pennsylvania’s Wharton School found that the bill prevented an additional 5% decrease in American economic output.
However, the same group of economists noted that stimulus bills not passed in the troughs of recessions — in this case, the $2.3 trillion HR 133, signed by President Trump in December 2020 and the $1.9 trillion American Rescue Plan, signed by President Biden in March 2021 — are far less effective at increasing economic output.
The federal government will disburse a total of $5.9 trillion in COVID-19 relief through its legislative efforts alone. If these funds had been evenly divided among America’s 143.3 million taxpayers, each would have received roughly $41,000.
Shortest recession? Undoubtably when you look at the numbers. The consequences of our government’s actions however and how they impacted the American taxpayer? That alone will be felt for generations.
Your humble servant,
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